Successful merger management
Various studies of the last decade have come to the conclusion that about half of all mergers fail and that more than 80 percent do not achieve the expected results. The biggest hurdle? In our experience, most managers underestimate the pitfalls of the integration process, especially on a cultural level. When purchasing a company, it is relatively easy to integrate or merge both parts into something new, but it is all the more complicated to harmonize cultures and to design processes in a comprehensive manner.
What makes this so difficult?
Takeovers and restructuring always lead to uncertainty and fear among the employees of both companies, as there are always losers in addition to the clear winners. Even if there are no "real" losers from the point of view of management, there are always people who see themselves as such in consideration of the uncertainty of the merger process.
An example from the animal kingdom: Who will support the project "Scrambled eggs with bacon" with a lighter heart?
Of course, the chicken! The pig will understandably show resistance.
This analogy from the animal kingdom may be somewhat macabre and not be appealing to everyone,
but it explains quite well which moods can cause resistance among employees during mergers."
Employee fear in mergers
All the fears of the employees must be absorbed by leadership and management, even those that are sometimes very vague. Otherwise, they will develop into resistances and become insurmountable hurdles in the merger process.
What are these fears, what do those affected actually fear?
- Loss of income, job losses
- new tasks (overload) the loss of important personal relationships (e.g. due to a transfer)
- the loss of social prestige
- the loss of scope for action and decision-making powers
- less development/career opportunities
All these fears generally increase the longer employees have unanswered questions, specifically: What am I facing, am I a loser or not? Therefore, management should answer these questions as quickly as possible. Otherwise, the rumor mill will start turning and the process of change associated with the merger will appear in an increasingly worse light to the employees. Then, because of doubt, even those who are actually among its winners will start to oppose the merger.
Maintaining non-partisanism during mergers
Mergers are the subject of many momentous decisions during a short period of time - for example, IT systems, staffing, market and product strategies. Positions are being filled anew and territories are being redistributed, whereby self-interests always play an important role. For this reason, top management should pay attention to a certain non-partisanship, so that no unnecessary losers, whether imagined or real, arise, in the acquired company in particular, which may block the process.
Mergers are a difficult business all around. But the actual work does not begin until the conclusion of the contract and the announcement of the merger. The merging companies must invest a lot of energy in shaping the integration process in the months and years thereafter. We would be happy to offer our experience and advice to help your company to continue to grow smoothly, grow together successfully and assist you in making your merger a successful project.
Creating a Communication Concept for Mergers
Many managers are convinced that they should only inform their employees when "the ink has dried" and everything has been decided. Otherwise, they create unnecessary uncertainty. They are accordingly reluctant to provide employees with any kind of information.
Then, they become alarmed when - especially in the case of listed companies - initial releases are floating through the press due to information requirements.
In addition, those who believe that they can plan merger processes down to the last detail will be left with only an illusion. Many decisions have a provisional character - partly because not all influencing factors and interactions can be recorded precisely. Therefore, the company and its management often break new ground in mergers and acquisitions. They have little or no experience in it. The concern of providing incorrect or incomplete information often leads to the persons concerned not receiving any official information. This creates an information vacuum that feeds rumors and half-truths, which in turn creates fears.
Therefore, a communication concept should be drawn up in addition to a merger strategy - with the following objectives, prior to each merger:
- Creating an understanding of the need for a merger
- Building trust in the decisions and transformation associated with it
- Gaining employee acceptance
- Generating motivation for individual steps, and thereby creating the basis for identification with the new company
Change communication for mergers
A key success factor for a successful merger is good change communication plan, which, when implemented well, is executed in a targeted manner. As change consultants, we take into account all phases of change in detail when drawing up a communication concept, tailor it and create the right mix of methods and measures, all in consultation with you.
Good communication regulates fears and serves to:
- create acceptance
- create an understanding of the need for a merger
- form coalitions
- build trust in management decisions
- mobilize target groups
- generate motivation for individual steps
Creating a new post-merger identity
Grief and celebration
Larger companies invest a lot of time and money into developing a corporate identity, i.e. a corporate culture. Employees should be proud of their company and identify with it. In the event of a merger, however, this identity is lost - especially in the case of the acquired company. Above all, employees who have strongly identified with the customs and rituals of their company find it difficult to part with them. They are grieving. In our private life, we take this for granted: Farewell requires time and can hardly be forced. In the corporate context, there is usually little understanding for this. Temporarily lethargic and sometimes even aggressive behavior as an expression of grief is not understood or respected.
But we all know that most people can only re-establish a new bond when the old one has been overcome and "digested". This must be taken into account when planning integration processes.
In the case of mergers, employees often live in a state of suspense until the transition to the new structure is complete: What happens next? What about me? Will my job still exist in the future? These questions move people! In this situation, employees often show the following behavior patterns:
- Service by the book: They no longer identify with the company, they only do what is necessary and follow the instructions of their superiors to a limited extent.
- Operative hectic pace: employees fall into a state of frantic activity. Countless projects are started. Everyone wants to be involved in as many things as possible in order to appear in a favorable light. It's not the quality of the work that counts, but the self-representation towards the superiors.
That is why it is important for top managers to ensure that they are able to offer their executives the best possible service during the transition period, so that they know how to behave. Without this orientation, a lot of energy is wasted.
TYPICAL CASES ON THE TOPIC MERGER
Change management consulting specifically for mergers
We advise and support you in the sustainably successful implementation of your merger and post-merger integration process.
Cultural analysis - A cultural check prior to mergers and as a basis for a successful post-merger integration process
What does "corporate culture" actually mean?
It embraces the values and manners of all employees in a company. These are decisive factors for cooperation, contact with customers and economic success. Values and beliefs lead to the development of rules of conduct, standards and (management) practices.
A corporate culture is not directed towards a target state like a corporate mission statement, but rather reflects an actual state. Knowing this is necessary to successfully merge two companies, not only on paper, but also in daily working life.
The culture of both companies merging is determined through discussions, interviews or questionnaires:
- What drives and motivates people in your organization?
- What kind of (shared/separate) values and beliefs exist?
- What memories from history shape the actions of your employees?
- What are the "beliefs"? (Example: "As a traditional company we can rely on our good reputation.")
- What do your employees value and what bothers them about your management style?
- Which kind of conflicts hinder desirable collaboration?
- What ideas and suggestions for improving the working climate exist?
With proper knowledge of the current state of affairs, the next steps for post-merger integration are as follows:
- What's the best of both worlds?
- What motivates employees and encourages them to support the process?
- What can the common corporate culture of the future look like?
- What is the best way to deal with the current cultural differences?
The K&P Consulting Triangle
The three cornerstones of the post-merger integration process
From our experience with mergers, there are three cornerstones that must be considered, balanced and kept in balance for the successful integration of two companies.
- Strategy - Is it clear, consciously selected? What are our goals? Which way are we headed? What other measures are still needed?
- Structure - Which structures and processes support the achievement of objectives? What else needs to be standardized? What else has to change?
- Culture - Which culture enables us to achieve our goals? Here, the best of both worlds has to be determined and connected.